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The view from the aircraft as it lands in Antigua is mostly green and lush. On the ground, alongside a dirt road, there are mango trees dripping with fruit and hand-painted signs advertising pigs and ducks for sale. Locals sit out in front of small shacks selling roast birds and Wadadli, the island beer, or beside stalls laden with "black" pineapples, coconuts and bags of sugar cane, a reminder of what used to be the island's main economic driver.

Now, of course, like other Caribbean destinations, Antigua depends on tourism and real estate development. And the pace at which new luxury hotels and houses are being built around its 365 beaches ("one for every day of the year") as well as rapidly rising property prices stand in stark contrast to the traditional laid-back nature of the island. The building boom begs the question: will Antigua, just 14 miles long and with a population of 70,000, lose its charm?

"Antigua is probably a little hot now with quite a lot of development going on," says Gordon Campbell Gray, who opened Carlisle Bay, a five-star hotel on the island's south coast, three years ago and is now planning "a civilised, small amount of villas in a quite Antiguan style" nearby. "Even the land next to us, which we very stupidly didn't buy back [in 2003], has gone up in price considerably."

Local estate agents say that beach-front land has jumped from $6 per sq ft four years ago to $20 per sq ft, or $215 per sq metre, today. Land with distant views of the water that cost $1.25 per sq ft has more than quadrupled in price. "For some buyers, money is not an option, [and] some locals are seeing this as their golden opportunity and selling," says Dominique D'Aloia, owner of Paradise Properties Connection, who has lived on the island for 25 years. "Now, everyone wants to live here or at least have a home here." Rock musician Eric Clapton, Virgin tycoon Richard Branson and actor Timothy Dalton are owners on the island and fashion designer Giorgio Armani bought two villas with ocean views on the north-west coast last year.

Antigua's first "golden era" was in the 1980s when British entrepreneur and yachtsman Peter de Savary injected millions to develop the St James's Club, on a 100-acre private peninsula. But after five or six years of activity the island's property market settled down. Two decades later there are new major players, including Amsterdam-based luxury home builder La Perla International Living and Sandals Resorts. Both are significantly expanding their operations in Antigua, while smaller hoteliers, such as Campbell Gray and Cocos and Cocobay founder Andrew Michelin, are opening new properties, some of which include one or a handful of condos and villas. Right next to Armani's stunning cliff-side retreat at Shell Beach is the Galley Bay Club, a new development of 40 luxury, two-bedroom apartments with natural coral stone floors and ocean views priced from $795,000.

"Previously, [development] was only hotel-based but there were very few villa or residential communities being built," says Ian Fraser, managing director of Fraser & Associates, a commercial property and hotel management company in Antigua. Partly thanks to the exposure offered by the West Indies hosting the 2007 Cricket World Cup, "we now expect to see quite a lot of these."

La Perla started developing its first resort in a cove on the Atlantic-facing coast, a gated community called NonSuch Bay, in 2004, says Hans Verver, the company's sales director in Antigua. Most of the 70 condominiums in phase one have been sold to British buyers at prices from $485,000 for a one-bedroom to nearly $1m for a three-bedroom, three-bathroom property with a private terrace. The development, which includes a beach club, private gardens and pools, and a small private marina on nearly 40 acres, is due to be completed in 2007.

La Perla has also bought several other properties, including a large tropical peninsula with views to Montserrat and Nevis that it hopes to develop with a US partner, and Jolly Harbour, a large marina, golf, hotel and residential complex on the west coast that it is updating and expanding. "There are 600 properties here but it is not overbuilt because it is spread out," Verver says. "We are also selling plots for construction of individual villas."

Fraser, whose company will provide local management to NonSuch Bay, grew up in Antigua and says the island has changed enormously. "There is talk of a large 300- or 400-acre development on the cards and it may have some social element where there is a requirement to build low income housing as part of it," he says.

Mark Cochrane, a developer whose parents were born and raised in Antigua, is already balancing his desire to benefit from the wave of American and British buyers looking for luxury homes with an obligation to give back to the community. His company, NUVN Development, one of the largest high-end homebuilders on the island, will next year launch a residential development for locals with 60 houses priced at about $100,000. "Many local houses are wooden, built a long time ago, and some, still standing from hurricanes, need repair. We are bringing new styles and designs for a reasonable price."

For now, developments in Antigua remain scattered and isolated and most islanders think the government has done a good job of preserving open spaces. Alex Michelin, whose London-based company Finchatton is involved with his father Andrew's new Hermitage Bay hotel project, notes that only about half of the beaches are accessible by road and only 20 have resorts on them. "It's now seen as 'the' chic unpoilt place to be in the Caribbean as Barbados becomes overdeveloped; property prices have soared; and it even has its own private jet terminal for the super-rich. But the speed of development looks to stay steady," he says. "If developing was easier on the island, more [resorts] would have [already] been built."

Officials are now working on a master plan to guide new construction over the next decade and working to forge links between wealthy newcomers and less wealthy locals. "We are being very careful about the way we progress," says Lorraine Headley, the island's director general of tourism, who is based in the capital and cruise-ship port, St John's. "There is always a delicate balance on an island where there is limited land, but residents recognise the benefits of investment, tourism and jobs. Many Antiguans are landowners anyway."

She notes that hundreds of islanders plan to open their homes to visitors during the cricket. But not everyone is embracing the building explosion. "More buildings mean more people living here, which will make the island more crowded," says one small business owner. He worries that the "genuine, down-to-earth Antigua" could disappear.

Others hope the developments might improve the island's infrastructure. Antigua has only one main road, which it is upgrading for the World Cup, but many are just bumpy dirt tracks with few road signs.

Rob Sherman, a 30-year resident of Antigua who lives on a 400-year-old sugar estate surrounded by royal palms, banana and mango trees, is encouraged by the upscale nature of the island's new developments. "It's [still] a beautiful place to live," he says.

His wife, Bernadette, a local businesswoman and board member of the Island Academy International school, agrees. Both natives and newcomers appreciate Antigua for what it is now - safe, relaxed, spiritual and fun - and "hopefully they can keep all this going as the island changes", she says.